Consumer price in the UK grew at the fastest annual rate pace in nearly three decades in January, official data showed Wednesday, piling up more pressure on the costs of live and reinforce the views that the center bank will raise prices for a third consecutive meeting.
The directory rate of consumer price inflation reached 5.5% in January, the highest since March 1992, the Office for National Statistics (ONS) said on Wednesday.
The reading beat economists’ expectations in a Reuters poll for hold it at 5.4% in December.
Prices have skyrocketed around the world over the past year, in largely to cause of soaring energy prices, while consumers facing also higher food costs as economies reopen after pandemic shutdowns.
“We understand the pressures people are facing with the cost of live,” said UK Finance Minister Rishi Sunak. in response to Wednesday’s data.
“These are global challenges,” he added.
Earlier this month, the Bank of England (BoE) revised up its inflation forecast to predict that inflation will peak at around 7.25% in April, when a 54% rise in regulated household energy bills impacting households hard.
When inflation reaches the highest levels in decades, lagging behind worker wage increases, central banks are deciding on how fast to raise interest rates.
The BoE has already rising interest rates twice in since December – raising rates from 0.1% to 0.5% – and financial the markets are expecting a new rate rise at 0.75% or 1% on March 17 after the BoE next Encounter.
the latest “to augment in CPI inflation…will add a little more pressure on the bank of England must continue to raise interest rates rapidly,” said Paul Dales, chief UK economist at Capital Economics.
The British Center bank does not expect inflation to return to son 2% target before in 2024, although most economists believe inflation will fall faster.
Rising energy prices have been the main driver of UK inflation so far, although global pandemic supply chain problems raised the price of lots of other merchandise too.
“Clothing and footwear pushed inflation up this month and although there are still traditional price declines, this is the smallest January drop since 1990, with fewer sales than last year“said ONS chief economist Grant Fitzner.
Brittany is not alone in see a push in the cost of life. The American consumer price inflation hit a 40-year high of 7.5% in January, while inflation in the euro area was 5.1%, the highest from the currency unique european creation.
Core inflation, which excludes sometimes volatile prices for energy, food, alcohol and tobacco, increased to 4.4% in January from 4.2% in December, son highest since the beginning of these recordings in 1997.
Retail price inflation – a longer term series that the ONS says is no longer exact, but which is used in commercial contracts and set interest payments for some government bonds – was the highest since March 1991 in January at 7.8%.
Wednesday’s data showed further inflationary pressure as manufacturers hiked prices 9.9% from January last yearthe most grand annual jump since September 2008.
If theon excludes volatile products such as food, tobacco and petroleum products, the 9.3% increase is the largest since the start of annual comparisons in 1997.
But the prices of factory entries grew somewhat less rapidly, showing an increase of 13.6%, down from 13.8% in December and a peak of more more than 15% in November.